The land of million-dollar homes

HANALEI — As one of the most desirable locations to visit on Kauai, living in Hanalei comes with a price.

Longtime resident Steve Lindsey remembers when nobody wanted to live there. He built his home close to Hanalei Beach Park before the North Shore town was built up over the decades to become a destination point on Kauai.

His house, he said, was one of only five others in his neighborhood.

“This was mostly swamp land and we didn’t have a grocery store — we had the general market over here at Ching Young store,” Lindsey recalled. “Princeville didn’t have the Foodland or any of that. We didn’t have a hardware store. To get gas, food and all of that stuff, you had to drive into town. I thought, ‘I finally found a place that’s isolated.’”

That’s not the case anymore.

Tourists now flock to Ching Young Village and the shopping and dining area across the street as one of the last stops before heading to Kee or Haena. Outdoor-seating restaurants line a short section of Kuhio Highway between Aku and Malolo roads. There are a variety of chic shops and cool eateries both on and off the beaten path.

Parking spots at Hanalei and Black Pot beach parks, meanwhile, can be few and far between, especially on weekends when beachgoers walk down Weke Road carrying surfboards, boogie boards and fluorescent-colored inner tubes to the beach.

And housing prices are skyrocketing. The land of Hanalei is the land of million-dollar homes.

“Now everybody wants to move here,” said Lindsey, who saw the assessed value on his 1,568-square-foot home rise by $90,600 from $1.41 million to $1.5 million over the past year. “For me, I’ll be here until I can’t afford it.”

When compared to the same time last year, the median sales price for homes in the Hanalei district, which stretches from Moloaa to Haena, jumped from $560,000 to $1,302,500 last month — an estimated 132 percent hike.

But those figures, real estate experts say, only tell part of the story.

Kauai Board of Realtors President Chad Deal said one or two sales of high-end homes or properties can change the sales prices dramatically.

Four Hanalei homes sold for a combined total of $16 million in February, according to Kauai Board of Realtors sales records.

One of them, a $12 million, 29,594-square-foot property on Weke Road, was purchased by Oakley Inc. founder James “Jim” Jannard, according to Kauai County real property tax assessment records.

“I would say those figures may not accurately reflect the median sales price currently because of large-priced property sales,” Deal said. “That, to me, does not reflect the real increase in value.”

So what’s so alluring about Hanalei?

Hanalei Bay, considered one of the most beautiful spots in the world, is usually dotted with boats and swimmers. Come sunset, crowds gather on the Hanalei Pier and families hang out on the beach, with children dashing and diving into the ocean.

At night, locals and visitors fill every seat around tables and the bar of the iconic Tahiti Nui, a 50-year-old North Shore restaurant and bar where a scene from the movie “The Descendants” was shot. It’s here they listen to live music, admire the historical pictures, soak in island culture and share stories of the day.

Hanalei resident Dick Smith, a Namolokama O Hanalei Canoe Club founder, said it is no secret that the price to live in the North Shore enclave has increased over time. But the beauty of the area has motivated him to stay.

“It’s the absolute beauty and recreational activities associated with the bay and the ocean that keeps us here — I can’t think of any other word,” said Smith, who moved to Hanalei with his wife 19 years ago. “There’s no doubt about it that the assessed value of the property has gone up and the property tax has gone up, but that’s the price that you have to accept, if you’re going to stay here.”

During the first quarter of this year, 33 residential properties were sold in the North Shore area, including Hanalei — a 43 percent increase from the 23 residential properties sold during the same time last year.

The sale of condos on the North Shore, meanwhile, jumped slightly from 19 to 23, according to property sales data provided by Coldwell Banker Makai Properties.

Land sales for the Hanalei district, however, dipped slightly from 13 during the first quarter of last year to five during the same time this year.

“I certainly am a lot more busier than I have been in the past five or six years,” Deal said. “With that in mind, there is more activity in the market.”

He attributed the slight uptick islandwide to a rise in first-time homebuyers and ease in restrictions imposed by real estate lenders.

“When I say we’re seeing more sales or more movement in the market, that doesn’t mean it’s going crazy again, it’s just that it’s more normalizing now,” Deal said. “We were going through a period where there were not very many sales at all and the ones that were taking place were people looking for bank-possessed properties or short sales. Now, we’re seeing a lot less of those — there’s actually very few compared to what it has been over the past couple of years.”

Paul Roy, principal broker and general manager of Coldwell Banker Makai Properties in Koloa, said there is actually more demand for affordable properties around $500,000 than high-end ones.

”Real estate is like the weather on Kauai — it is local,” Roy said. “What is happening in one part of the island may be different than another part of the island — rain on the North Shore but sunny on the South Shore. What is happening in one area or for one type of property might be different than another.”

Lindsey pointed out that high property sales in areas like Hanalei ultimately impact the assessed value of nearby homes, which in turn, causes real property taxes to rise even if county officials don’t raise tax rates.

Lindsey said the situation North Shore residents are facing is beginning to occur elsewhere on Kauai, including parts of Lihue and Koloa.

“What’s happening now is that our neighbors are being forced out because they can’t pay their property taxes — it’s not comfortable anymore,” Lindsey said. “Then the eyes that we have on the neighborhood … goes away. One by one, all of these houses are sold and most of the people who buy them now don’t live in them — they’re just sitting there empty.”

Kauai County Councilman Gary Hooser said he would like to take a closer look at how to prevent escalating assessed home values from impacting real property taxes.

“The county needs to freeze property taxes at the current rates and amounts that people are paying — freeze property taxes until there is a comprehensive review of our property tax structure,” Hooser said. “The amount of property tax increases that we’re undergoing is just crazy.”

Visitor Wayne Lambert, who vacations in Hanalei once a year for a month, wasn’t surprised by the million-dollar home average.

“I’d believe it,” he said Saturday. “Look at this place.”

A seasoned traveler, Lambert said as much as he loves Hanalei, he doesn’t think he could land property here. “Financially, I don’t think I could,” he said. “I’m out of my league.”